Question
Tilson Corporation has projected sales and production in units for the second quarter of the coming year as follows: April May June Sales 54,000 44,000
Tilson Corporation has projected sales and production in units for the second quarter of the coming year as follows:
April | May | June | |
Sales | 54,000 | 44,000 | 64,000 |
Production | 64,000 | 54,000 | 54,000 |
Cash-related production costs are budgeted at $4 per unit produced. Of these production costs, 50% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $40,000 per month. The accounts payable balance on March 31 totals $183,000, which will be paid in April.
All units are sold on account for $10 each. Cash collections from sales are budgeted at 50% in the month of sale, 30% in the month following the month of sale, and the remaining 20% in the second month following the month of sale. Accounts receivable on April 1 totaled $663,000 ($113,000 from February's sales and $550,000 from Marchs sales).
Required:
a. Prepare a schedule for each month showing budgeted cash disbursements for Tilson Corporation.
b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Corporation.
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